37210 - Mathematics Models for Finance 1

Academic Year 2011/2012

  • Teaching Mode: Traditional lectures
  • Campus: Bologna
  • Corso: Second cycle degree programme (LM) in Financial Markets and Institutions (cod. 0901)

Learning outcomes

Mathematical tools in measure theory and differential equations in view of applications in Mathematical finance

Course contents

Lebesgue measure and Lebesgue integral. Abstract measure. Probability measure. Beppo Levi's Theorem (monotone convergence), Fatou's Lemma, dominated convergence Theorem. Derivation of integrals dependent by a parameter. Integration in product spaces: Fubini's Theorem. Decomposition of integrals on R^2. Change of variable. Absolute continuity: Radon-Nikodym Theorem. Lebesgue Stieltjes measure. Review of some useful special functions: Euler Gamma and Beta. Ordinary differential equations of first order: linear and separable. Second order linear differential equations. Partial differential equations: the heat equation integrated by means of Fourier transform and Gamma function.

Readings/Bibliography

M. Capinski and E. Kopp: Measure, Integral and Probability. Springer 2004 
D. Sondermann: Introduction to Stochastic Calculus for Finance. Springer 2006
B. Osgood: The Fourier Transform and its Applications. Lecture notes available at http://arni.epfl.ch/_media/courses/circuitsandsystems2011/book-2009.pdf
R.P. Aagarwal, D, O'Reagan: Ordinary and Partial Differential Equation: Springer 2008, lessons 1, 41, 42, 43 
H. Hsu: Probability, Random Variables and Random Processes, MacGraw Hill

Teaching methods

Lessons ex Cathedra. Homework

Assessment methods

Written examination

Teaching tools

Video beamer

Links to further information

http://www.danieleritelli.name

Office hours

See the website of Daniele Ritelli